TORONTO, Feb 11 (Reuters) - Shares of BlackBerry fell 3 percent on Monday after U.S. home improvement retailer Home Depot Inc said it is replacing the BlackBerry smartphones it provides its executives and managers with Apple Inc’s iPhone.

The news is a setback for BlackBerry as it fights to retain its base of big corporate clients and government agencies. The recent launch of a revamped line of smartphones powered by its reengineered BlackBerry 10 operating system was a crucial step in that effort.

BlackBerry, which is changing its legal name from Research In Motion Ltd, unveiled two new devices - a full touch-screen smartphone dubbed the Z10 and a more traditional physical keyboard version named Q10 - at a launch event in New York on Jan. 30.

The company hopes the make-or-break new line will help it win back market share ceded in recent years to the likes of Apple and Samsung Electronics Co Ltd, whose Galaxy line is powered by Google Inc’s market-leading Android operating system.

The news of Home Depot’s defection sent BlackBerry shares 3.8 percent lower to $15.86 in afternoon trading on the Nasdaq on Monday, overshadowing media reports that its Z10 device made a strong debut in the United Arab Emirates on Sunday. Since their unveiling, the devices have been well received in Britain and Canada. The all-important U.S. debut comes next month.

Stephen Holmes, a spokesman for Home Depot, confirmed an earlier report on the Apple Insider blog site that the retailer was issuing iPhones to almost 10,000 executives, managers and corporate staffers who currently use the BlackBerry.

He declined to say when the company had begun this process, and whether the decision was made before or after the launch of the new BlackBerry 10.

“We are replacing the current base of BlackBerry technology with iPhone, but these are not the mobile devices used in our stores,” Holmes said.

The Apple Insider report said the move would have no impact on the 60,000 rugged Motorola smartphones used by Home Depot’s store employees. Those devices provide mobile point-of-sale, analytical, walkie-talkie and traditional telephony services.

BlackBerry declined to comment directly on Home Depot’s move, but in an email said it is seeing strong demand for its new Z10.

“We have over 2,700 unique businesses in North America already registered for our BlackBerry 10 Ready Program,” Amy McDowell, a spokeswoman for the company, said. “We are confident that BlackBerry is, and will continue to be, the best solution for corporations managing large smartphone deployments.”